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Japanese pension funds put record amounts into alternatives
August 4, 2019--Allocation to domestic government bonds falls to 18.3%
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Source: FT.com
Chinese Yuan Skids to 2019 Low as Trump Ramps Up Trade Conflict
August 2, 2019--Threat of more tariffs further clouds Beijing’s efforts to manage its currency
China's yuan slid to its weakest level of the year, nearing the symbolic level of 7 per dollar, after President Trump threatened to impose more tariffs on Chinese imports.
The prospect that tariffs could be extended to essentially all Chinese imports has further clouded China's efforts to manage its currency. A weaker yuan makes it cheaper for U.S. buyers to purchase Chinese goods, helping offset the impact of higher tariffs. But China doesn't want to prompt an exodus of capital, which in turn could prompt further currency...
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Source: wsj.com
IMF Working Paper-Labor Market Slack and the Output Gap: The Case of Korea
August 2, 2019--Summary:
Output gap estimates are widely used to inform macroeconomic policy decisions, including in Korea. The main determinant of these estimates is the measure of labor market slack. The traditional measure of unemployment in Korea yields an incomplete estimate of labor market slack, given that many workers prefer involuntary part-time jobs or leaving the labor force rather than registering as unemployed.
This paper discusses a way in which the measure of unemployment can be broadened to yield a more accurate measure of labor market slack. This broader measure is then used to estimate the output gap using a multivariate filter, yielding a more meaningful measure of the output gap.
view the IMF Working Paper-Labor Market Slack and the Output Gap: The Case of Korea
Source: IMF
IMF Staff Country Report-Indonesia: Selected Issues
July 31, 2019--EXCHANGE RATE AND TRADE DYNAMICS IN INDONESIA: CONNECTING THE DOTS1
This paper provides an overview of the exchange rate and trade dynamics in Indonesia. Using data on monthly export and import price and volume at the sectoral level, the paper estimates pass-through effects of exchange rate changes to trade price and volume. Results indicate adjustment frictions that depend on the source of the exchange rate fluctuation and the degree of integration in global value chains.
Overall, combining price and volume effects, we find that a 10 percent depreciation in the exchange rate is associated with a rise in the goods net-exports of up to 1.6 percent of GDP.
A. Exchange Rate and Trade Balance: Recent Trends
1. Movements in exchange rates play an important role in determining how a country's trade balance adjusts in response to both external and domestic shocks. Exchange rates typically act as a shock absorber, in the sense that in response to an external shock, a depreciation
should boost exports through the competitiveness channel and reduce imports as they become more expensive relative to domestic goods.2
view the IMF Staff Country Report-Indonesia: Selected Issues
Source: IMF
Japan says GDP growth could slow to 0.9% on weakening global demand
July 29, 2019--Japan's government slashed its economic growth forecast for this year largely due to weaker exports, in a sign the protracted U.S.-China trade war is taking a bigger toll on the world's third-largest economy.
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Source: Reuters
Malaysia has achieved high levels of growth, but must do more to address governance and social challenges
July 24, 2019-- Malaysia's economic performance has been very successful, but public policy can do more to address social and governance challenges while making growth stronger, greener and more inclusive, according to a new report from the OECD.
The latest OECD Economic Survey of Malaysia discusses how boosting productivity and implementing new structural reforms can help Malaysia move up global value chains and reach its goal of achieving high-income country status by 2024. The Survey projects the economy will remain resilient, with growth just under 5% this year and next, but cautions that trade tensions, geopolitical uncertainties and weaker advanced economies are downside risks.
view the OECD Malaysia Economic Snapshot
Source: OECD
China's investment in Africa: What the data really says,and the implications for Europe
July 22, 2019--China has clearly signalled to Europe that it does not shy away from involvement in Africa, historically Europe's area of influence. But the nature of China's direct investment flows to the continent will have to change if they are to prove sustainable.
Chinese president Xi Jinping visited Senegal in July last year, seeking further cooperation with the previous French colonial territory. Amid a heated debate over China's increasingly dominant role in the world, this visit-before the 2018 Forum on China-Africa Cooperation (FOCAC) in Beijing -clearly sent a signal to Europe that China does not shy away from entering what is historically Europe's area of influence, namely Africa. From China, such move is not surprising, as China-Africa relationships flourished at least half a century ago under the mantra of South-South cooperation.
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Source: bruegel.org
SSE STAR Market 50 Component Index to be Released
July 19, 2019--The Shanghai Stock Exchange (SSE) and China Securities Index Co., Ltd. (CSI) announce that they will officially release the SSE STAR Market 50 Component Index on the 11th trading day when the number of stocks and depositary receipts listed on the SSE STAR Market reaches 30. The launch of the index will reflect the overall price performance of the listed companies on the SSE STAR Market in a timely manner, further demonstrate the structure as well as the development and changes of the market, and enrich the SSE index system.
At present, internationally influential and highly recognized indexes are mainly component indexes, which can be used not only as a yardstick for measuring the overall performance of the market, but also as a necessary instrument for asset allocation, investment and risk management as well as performance evaluation.
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Source: Shanghai Stock Exchange (SSE)
Five Charts Explain Vietnam's Economic Outlook
July 17, 2019--Despite rising trade tensions and volatility in emerging economies throughout 2018, Vietnam's economy saw broad-based growth and low inflation. Government spending and debt remained in check and bank capital rules were strengthened. Current economic risks relate to geopolitics, trade policy uncertainty, and domestic reform implementation. Looking ahead to the longer term, Vietnam will face risks related to aging, climate change, and digitalization.
Extensive market-oriented and outward-looking economic policies have helped Vietnam achieve sustained and inclusive economic growth. To maintain growth and raise its quality, Vietnam needs to modernize economic institutions, especially in terms of fiscal and monetary management, and continue with market-oriented and outward-looking reforms.
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Source: IMF
IMF Working Paper-Inflation Co-Movement in Emerging and Developing Asia: The Monsoon Effect
July 11, 2019--Summary:
Co-movement (synchronicity) in inflation rates among a set of 13 emerging and developing countries in Asia is shown to be strongest for the food component, partly due to common rainfall shocks—a result which the paper terms the 'monsoon effect'. Economies with higher trade integration and co-movement in nominal effective exchange rates also experience greater food-inflation co-movement.
By contrast, cross-country co-movement in core inflation is weak and the aforementioned determinants have little explanatory power. suggesting a prominent role for idiosyncratic domestic factors in driving core inflation. In the context of the growing literature on the globalization of inflation. these results suggest that common weather patterns are partly responsible for any role played by a so-called ‘global factor’ among inflation rates in emerging and developing economies. in Asia at least.
view the IMF Working Paper-Inflation Co-Movement in Emerging and Developing Asia: The Monsoon Effect
Source: IMF
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